Families USA Report Gives Pennsylvania a Failing Grade When it Comes
to Protecting Consumers in the Individual Health Insurance Market

Lack of State Protections Is a Boon for Insurers and a Burden for Consumers

Pittsburgh, PA — Pennsylvania and most other states are doing very little to provide basic protections for consumers who buy health coverage on their own, according to a new report by Families USA. As a result, many consumers can’t qualify for coverage, are charged unaffordable premiums, or have their health claims wrongfully denied. A copy of the report is available online at www.familiesusa.org.
“Unfortunately, the Commonwealth of Pennsylvania has very little authority to protect consumers who buy health coverage on their own,” said Jessica Seabury, Director of Consumer Health Coalition. “Because state oversight is so weak, insurance companies can deny coverage, charge exorbitant premiums, and even revoke people’s policies without review by the PA Insurance Department.”
The report was released today at a news conference in Pittsburgh organized by the Consumer Health Coalition and the PHI Health Care for Health Care Workers campaign. The event coincided with the Pittsburgh stop of Consumer Reports Health’s Cover America Tour, which is traveling around the country to highlight the difficulties Americans face getting affordable, high quality health coverage. More information about the tour is available at www.CoverAmericaTour.org
“Americans who buy insurance on their own end up paying more for less coverage and are vulnerable to insurance company rip-offs,” said Meg Bohne, Campaign Organizer for the Cover America Tour. “People who consider themselves healthy can be denied coverage because of previous treatment, even for conditions such as hay fever and acid reflux.”
Titled “Failing Grades,” the Families USA study reviews whether key protections are provided to healthy consumers to prevent insurance company abuses in Pennsylvania, as well as each of the other 49 states and the District of Columbia. The findings in the report show that consumers in Pennsylvania and most states are unprotected from unfair treatment:
• Pennsylvania does not prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else. Only five states do so.
• In Pennsylvania and 34 states and the District of Columbia, there are no limits on how much insurers can increase premiums based on an individual’s health status. An additional six states have limits that still allow dramatic variations in premiums.
• In Pennsylvania, insurers can exclude coverage of pre-existing conditions for up to 12 months. In 21 states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for more than one year.
• In Pennsylvania and 28 states and the District of Columbia, insurers are allowed to deny legitimate claims of policyholders who are up-to-date with their premium payments by digging back months or years into the policyholder’s medical history and alleging that they failed to disclose, or should have known about, a pre-existing condition.
• In Pennsylvania and 43 states and the District of Columbia, insurers can revoke an individual’s health insurance policy without advance review by the state.
• In Pennsylvania and 19 states and the District of Columbia, insurers can set and raise premiums without meaningful oversight.
“Pennsylvania like most other states allows insurers to game the system when it comes to the individual insurance market,” said Tracy Lawless, PHI Health Care for Health Care Workers campaign. “That’s a boon for insurers, but a real burden for families struggling to obtain health coverage on their own.”
A 2007 Consumer Reports survey found that 76 percent of people without insurance said they couldn’t afford an individual plan. Indeed, only about 7 percent of adults have individual insurance. Yet any adult who hopes to retire early, loses a job, is self-employed, or has an adult child leaving a group plan could face the prospect of trying to buy such a policy. The Consumer Reports survey found that individual buyers were more likely to have complaints compared to those who get insurance through an employer: 71 percent vs. 53 percent.
Guy Cutrone of Carnegie spoke at the news conference about his difficulty obtaining affordable health coverage. Carnegie recently started receiving Social Security Disability benefits. He won’t qualify for Medicare for another two years and is currently uninsured. “I couldn’t get insurance on my own because it turned out to be too expensive and I couldn’t get coverage for the care I needed,” said Cutrone.
Pennsylvania scored better in the Families USA report compared to other states when it came to certain other consumer protections related to the individual market. Pennsylvania law requires insurers to use an objective standard to define pre-existing conditions, requires medical underwriting to be completed during the application process, and makes external reviewer decisions binding. However, the report found that external reviews of insurance company abuses are available to Pennsylvanians in some but not all health plans.
“If a consumer is offered little in the way of protections up front, a review process doesn’t help much,” said James Browning of the Pennsylvania Public Interest Research Group (PennPIRG). “An external review can’t go back and create rights and protections that the consumer isn’t granted by law in the first place.”
Jessica Seabury, Consumer Health Coalition: 412-456-1877 x204
Michael McCauley, Consumers Union: 415-902-9537 (cell)
Alan Krawitz, Youngworth Communications: 800-615-1230 x18